Amazon pays $1 billion cash for Twitch

Beefing up its video-game portfolio, Amazon.com will add Twitch Interactive to its roster, agreeing Monday to a $970 million cash deal to buy the popular site, which lets gamers stream videos of their game playing.

Twitch, which spun out of Justin.tv, a business launched by former Seattleites Justin Kan and Emmett Shear, is a San Francisco-based social network for gamers. It allows gamers to stream live video feeds of the games they are playing, post videos of their games and follow gamers who do the same.

The app is also available on Xbox and PlayStation platforms.

In July, more than 55 million unique visitors visited Twitch, viewing more than 15 billion minutes of content produced by more than 1 million broadcasters.

In a statement, Amazon CEO Jeff Bezos highlighted the “global phenomenon” of broadcasting and watching gameplay and said the company plans to help Twitch “move even faster to build new services for the gaming community.”

Amazon has been building its game business for several years, acquiring game studios and adding developer staff. The company has also built gaming into its Fire TV streaming-media device, giving customers a compact-but-limited video-game console.

Amazon is fighting to prevent a repeat of the digitization of music as games shift to downloadable distribution. In music, Amazon was late to the digitization phenomon, as sales shifted from compact discs to downloads and the company saw many millions of dollars in sales disappear.

In an emailed statement, Mike Frazzini, vice president of Amazon Games, put the deal in the context of other technology his group has created for gamers and game developers.

“Twitch is another substantial step in this direction for Amazon,” Frazzini said. “Twitch has fundamentally changed how games are consumed and interacted with, and it’s a service that gamers and game broadcasters now find hard to live without.”

In addition to boosting Amazon’s gaming portfolio, Twitch could add to Amazon’s growing advertising business. Many of the Twitch videos include advertising, and Amazon has been pushing deeper into the video-ad business.

It’s unclear how Amazon will integrate Twitch into its business. But in a letter to the Twitch community, Shear said Amazon won’t move the company from San Francisco.

“We’re keeping most everything the same: our office, our employees, our brand, and most importantly our independence,” Shear wrote. “But with Amazon’s support we’ll have the resources to bring you an even better Twitch.”

Just a month ago, Twitch had been rumored to be on the block, with Google the reported suitor, also for about $1 billion. Amazon expects to close the acquisition by the end of the year.